Homeowners Insurance Policies Flashcards
6 cards from real P&C practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Homeowners Insurance Policies flashcards as text
A homeowners policy's 'loss of use' coverage (Coverage D) pays for:
Answer: Temporary housing and extra living expenses when the home is uninhabitable due to a covered loss
Coverage D (Additional Living Expenses / Loss of Use) pays the extra costs the insured incurs to maintain their normal standard of living while their home is being repaired after a covered loss.
Which of the following is correct about the homeowners policy's 'personal liability' coverage (Coverage E)?
Answer: It covers the insured's liability for bodily injury and property damage to third parties, subject to an exclusion for intentional acts
Coverage E pays on behalf of the insured all sums they become legally obligated to pay as damages for bodily injury or property damage, subject to exclusions including intentional acts and auto liability.
What is the significance of the '80% coinsurance rule' in homeowners insurance?
Answer: The insured must insure the dwelling to at least 80% of its replacement cost to collect full replacement cost on a partial loss without a penalty
The 80% coinsurance requirement means the insured must carry insurance equal to at least 80% of the dwelling's replacement cost; if underinsured, partial losses are paid on a proportional basis.
An HO-6 policy is designed for owners of:
Answer: Condominium units
The HO-6 (Unit-Owners Form) is designed for condominium owners; it covers their personal property, interior improvements to the unit, and personal liability.
Under a homeowners policy, personal property is typically covered on a 'worldwide' basis, meaning:
Answer: The insured's personal property is covered anywhere in the world, subject to sublimits away from the residence
Most homeowners policies cover personal property anywhere in the world, but property located away from the residence is often subject to a sublimit (typically 10% of Coverage C) and still subject to the same named perils.
What effect does the 'vacancy clause' in a homeowners policy have on coverage?
Answer: Certain perils such as vandalism and glass breakage are excluded if the home has been vacant beyond a specified period, usually 60 days
Standard homeowners policies exclude or limit coverage for certain perils — most commonly vandalism and malicious mischief and glass breakage — when the dwelling has been vacant for more than the specified period (typically 60 days).